We’re heading into earnings season after a particularly difficult fourth quarter that saw the S&P 500 briefly cross into bear market territory on Christmas Eve.
Since then, the index has rebounded. However, there’s still quite a bit of ground to make up.
In a report from Goldman Sachs, U.S. chief equity strategist David Kostin said that his team’s “base case” target for the S&P 500 is 3,000 points by the end of 2019, 12% higher than where the index sits now.
According to Goldman, this year “decelerating growth favors defensives over cyclicals,” and Kostin’s team favors the information technology, communication services, and utilities sectors as “overweight,” and have neutral ratings for health care, financials, consumer staples, and energy. The team is “underweight” the consumer discretionary, industrials, real estate, and materials sectors.
For individual stocks, Kostin’s team incorporated into their analysis analysts’ ratings and price targets, assessments of value based on earnings and sales estimates, as well as anticipated share buybacks.
Their list is made up of a number of stocks that have a majority “buy” or equivalent rating from analysts and have been knocked down by roughly -20% since the end of the third quarter.
Nektar Therapeutics (NASDAQ: NKTR) is at the top of the list. The stock is down nearly -34% since its high reached at the beginning of September, but the stock is rated a Buy by nine out of the ten analysts covering the stock.
Analysts’ average price target for NKTR is $86.67, suggesting possible upside of 87.55% over the next twelve months.
Also on the list is Anadarko Petroleum (NYSE: APC). The energy stock is down roughly -32% since early October. Of the 25 analysts covering the stock, 20 rate it a Buy, and their average twelve month price target for the stock is $79.15, indicating potential upside of 62.62%.
The list also includes Alexion Pharmaceuticals (NASDAQ: ALXN), which is down -17% since its high reached in late September. The biotech was caught up in spiking market volatility last month, however its newest blood disorder treatments are reportedly progressing well through the clinical testing phases.
Fifteen out of the seventeen analysts coving the stock rate it a Buy, and their average price target for ALXN is $165.19, suggesting possible upside of 41.13% over the next twelve months.